Push to relax the grip of Whitehall on region

Deputy Prime Minister Nick Clegg will suggest Sheffield and Leeds could set up their own versions of Transport for London – the organisation controlled by Mayor Boris Johnson which runs public transport in the capital including setting fares and timetables.

Officials could also commission rail services and work with other cities to help control services like trans-Pennine routes in what Mr Clegg will hail as the biggest handover of power from Whitehall “in generations”.

Instead of “going on bended knee” to a series of Whitehall departments to bid for cash for different capital projects, cities also could be offered a single pot of funding to decide for themselves what schemes to fund in order to boost their economy through individual “deals” agreed between the Government and each of England’s eight biggest cities outside London. Deals could be agreed with other cities in the future.

Mr Clegg and Local Government Minister Greg Clark will unveil the plans today at a conference in Leeds on rebalancing the economy organised by think tank IPPR North. Mr Clark has suggested cities who introduce an elected mayor in referenda to be held next year are more likely to be given greater powers.

“Our analysis is in addition to banks blowing up in 2008, weaknesses in our infrastructure and over-reliance on the south east as a locomotive for growth in the UK, one of the big weaknesses which has hobbled the UK economy for far too long is that we haven’t set our big cities free,” Mr Clegg told the Yorkshire Post.

“Our big cities – Birmingham, Sheffield, Leeds and so on – used to be the great engines of growth not just in this country but in Europe and the world a century or more ago and we want to set them free, put them back on their feet to be able to act as catalysts of growth, as places where people come to live, work, innovate and create new businesses.”

Civic and business leaders in Yorkshire have pressed for greater decision-making powers to be devolved to the region after looking on enviously at those wielded by the London Mayor and Scottish First Minister. The Yorkshire Post’s Give us a Fair Deal campaign has also called for a power shift.

Transport bosses are currently waiting for Ministers to decide whether to approve five schemes in the region – including trolleybuses for Leeds and a bus route between Sheffield and Rotherham – but in future those decisions could be made by city leaders, who would instead be given a pot of money and told to decide for themselves how to use it.

Both Ministers will stress it is up to the individual cities to decide what powers they would like, but a “menu of options” to be floated today will include commissioning of rail services and controlling bus services.

Sheffield is among the cities pushing for devolution of powers and funding to run rail franchises, while Mr Clark pointed to trans-Pennine services as “an area we would like to explore”, with Leeds, Liverpool and Manchester among those who may work together to bid for powers giving them a say over the running of the routes.

Councils could be taking over the running of Job Centre Plus to tailor services to their particular needs, while new Apprenticeship Hubs could be created to bring together businesses looking for an apprentice and colleges who can refer their students, bypassing the bureaucracy of national schemes.

Sheffield is also said to be keen to create a local investment fund to include assets held by the Homes and Communities Agency, which could give the city more control over regeneration projects.

Other powers that are up for grabs will range over housing, skills and worklessness, and business support.

Cities will be urged to be ambitious but will have to back up their bid with evidence of how it will boost the economy. The first deals could be agreed before the Budget in March.

Mr Clegg will urge cities to take a lead on broadband, highlighting how Philadelphia offers free wi-fi across the whole city to encourage small hi-tech businesses to set up.

Mr Clark said: “City deals are a bold and ambitious new idea to put cities back in charge of their own economic destiny and to seize the opportunities for growth. They represent a fundamental shift in the way that Whitehall works, the presumption being that powers should be handed down wherever cities make a convincing case.”

But he also suggested that cities who install an elected mayor in May – when referenda will be held in Leeds, Sheffield, Bradford and Wakefield – could be more likely to receive extensive powers. To gain powers, cities would have to “demonstrate that they can exercise leadership within the city itself but with the surrounding region” as well, said Mr Clark.

Having an elected mayor provides a “visible and immediate” mandate, he said.

Cities will also have to give guarantees of what they will do with the extra powers. Ministers are increasingly focusing on the eight core cities – which also include Birmingham, Bristol, Newcastle, Manchester, Liverpool and Nottingham – as they seek to find ways to boost the economy and desperately try to tackle the North-South divide.

Councils to keep ‘bulk’ of rates

CONTROVERSIAL plans to allow cities to keep “the bulk” of their business rates to foster economic growth will come into force in April 2013.

Instead of sending all their business rates to the Treasury to be redistributed according to a formula, councils will keep most themselves to encourage them to attract more businesses.

Mr Clegg insists a mechanism will protect areas with weaker economies but councils like Barnsley still fear they will lose out.

Councils will also be able to compete against neighbouring areas by offering rate discounts, while Tax Increment Financing will allow them to borrow against future business rates to fund infrastructure projects.